I am a courier (self employed sole trader providing services for one company) and currently use cash basis for my records. Most of my expenses are mileage (I use AMAP rates).
I have decided to register voluntarily for VAT + FRS (10%) and backdate it to March 2019. My turnover is and will remain below the threshold. The company I provide services for are happy to pay me VAT for all the time since.
I read a lot about this (official gov uk materials + this website + google). There are a few bits that are still not clear to me.
1) 1% discount for the first year of registration - if I backdated my registration does it mean I am ineligible? Or do I apply it to my turnover between March 2019 and March 2020? Or 1 year from now? I am confused
2) I want to continue the "cash basis like method" obviously now I'll receive a lump sum from the company (2.5 years of VAT) of which I pay back some under FRS and keep some. Does it count as this year's turnover for my self assessment? Is VAT paid by the company my turnover and VAT paid back as FRS my expense? That means I may end up paying more income tax as in 2019-2020 my earnings were below the tax free allowance but I have completed my past tax returns so if I receive a lump sum of backdated VAT now that counts as this year's turnover is it right?
3) my colleagues told me VAT is really simple just do quarterly retuns type in payments from company (VAT inclusive) and take 10% off it to pay back, all done. Yeah easy but I've read that I need to maintain complete records in a so called VAT account and from next year it has to be MTD compatible. I am unsure how my records should look like and how can I prove I am not a limited costs trader when using AMAP for motoring costs (motoring costs are valid for me as I work in transport). Do I need to record every single mileage entry (one a day) in there? Expenses that are not VAT (there is another courier working for me not VAT registered he issues me invoices every month and I pay him cash, this is my expense)? I am confused cause FRS is meant to be simple but I guess I need to somehow prove I am not a limited cost trader in my records? I use Excel spreadsheet at the moment and will be using it for this VAT account too just not sure what to include on there. I'd rather be ready for MTD when they make it compulsory next year.
4) The mysterious text that "FRS has its own cash accounting method" I couldn't find anything about it - is it different to the cash basis I use for my self assessment records?
As you can see I got a bit tangled in different schemes that I hope can be combined. FRS - cash basis method - AMAP mileage rates - not a limited costs trader - backdated registration - 1% discount? - implications for income tax - records keeping
Thank you in advance for any advice